Paul Krugman on India: Progress made but economic inequality remains

Nobel Laureate Paul Krugman on Saturday said India has made rapid progress on the economic front but economic inequality in the country remains an issue. Krugman said India though has become a much "better place to do business" than it was earlier. "India achieved as much economic progress in the (last) 30 years as the Great Britain did in 150 years. It is a very rapid space of transformation....why does there still seem to be visible poverty in India?  "One problem is high degree of economic inequality," he said at the News 18 Rising India Summit. He also said India has made "enormous strides" in economic progress but the wealth has "not been evenly distributed". He also touched upon the problem of corruption that the country has been facing. "There are issues of corruption. You can`t become Denmark with Chinese levels of corruption," he said.

Trump views 50 years out of date, may trigger disruptive trade war: Paul Krugman

Criticising the US President Donald Trump for his protectionists policies, Nobel Laureate Paul Krugman on Saturday accused President Trump of not taking his jobs seriously.

Following the protectionist measures taken by the US President, there could be "risks of disruptive trade war", he said.

"He does not take the job seriously. He doesn`t say to himself that I am the most important official in the world; I have better do my homework for understanding the issue. ..He just goes that these are my gut feeling and hires people who make him feel good...that is a frightening prospect," Krugman said responding to a query on his perception on Trump.

On the economic issues President Trump`s gut feelings are "protectionist" and his views of America were "50 years out of date".

"He wants America a heavy industrial country in the way it was when he was a young man. That is not just going to happen but he attempts to make it happen, which is extremely disruptive to America and to the global as a whole," Nobel Laureate said.

Krugman said he was till recently optimistic that Trump`s protectionist policies would not see the light of the day.

"Until about two weeks ago, I was quite optimistic that it would not happen. The reason was not because the President would get good economic advice but because the US businesses are invested in a globalised economy. All the investments the businesses have made is based upon the assumptions that the open trading system would continue. There is an enormous amount of fiscal capital and a large number of jobs are dependent on these value chains," he said at the News18 Rising India Summit here. 

Krugman further said: "I had assumed the influence of these business communities would be sufficient... that it would not happen. I am less optimistic now...we have seen reasonably sensible Economic Council Head was fired, completely irrational tariff (was) imposed on steel and aluminium."

According to him, immediate issue is going to be confrontation not with China, but with Europe as the "steel tariffs" will hit Europe. He said there are possible risks of "disruptive global trade war".

Speaking on Chinese economy he said, "China is a financial crisis waiting to happen. China is a widely unbalanced economy...the country is sustaining itself with a credit bubble that is waiting to burst...There is a significant risk of Chinese bubble burst."